Norris leaving a stronger CBA

IN 2005
Ralph Norris
rejoined a
Commonwealth Bank
, if not exactly in disarray, then slightly off course after the long reign of
David Murray
.

He will leave CBA the market leader, having handed over to an internal successor – a positive sign.

Murray lifted CBA from stolid government bureaucracy to strong commercial bank, but never won strong customer satisfaction and stayed a little long, losing internal successors including
Gail Kelly
,
Michael Ullmer
and
John Mulcahy
.

Norris, who had left the helm of CBA’s ASB subsidiary due to ill health, then had a successful stint running Air New Zealand, was brought back with a commission to lift satisfaction – it was even built into his remuneration.

That he did. Chairman
David Turner
referred explicitly to this on Friday, noting CBA’s customer satisfaction discount had improved from 12 percentage points behind the leader to 3 percentage points.

Turner also emphasised the cultural transformation under Norris – and again it is something for which he has received broad recognition.

In an article on Norris’s cultural agenda in AFR Boss last year, Australia and New Zealand Banking Group CEO Mike Smith said “Ralph’s done a really good job when you think about how difficult it is to turn around an organisation like a big bank".

Norris’s early mantra was “engaged staff make for satisfied customers who lead to more sustainable profits". He succeeded and, particularly on staff engagement where his direct involvement was pivotal, he was always wont to turn up at meetings unannounced.

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Which is not to say Norris is not prickly. He rants about poor media coverage – but he often does his complaining personally.

One of the low points of his reign was a botched – by some accounts all too clever – $2 billion capital raising in 2009 when CBA and Merrill Lynch tried to manage a loan impairment warning at the same time.

CBA blamed Merrill and Norris sent a private letter to Merrill CEO Ken Lewis, proving even Wall Street titans were not spared his wrath. CBA was fined $100,000, the maximum penalty, by the Australian Securities and Investments Commission. CBA agreed to pay the fine but snubbed Merrill on future advisory work. Norris also publicly admonished high-profile banker John Wylie of Lazard for supposedly heavying one of his board members after CBA aborted the purchase of ABN Amro Australia.

Norris was less on the front foot over his bank’s involvement in the collapse of Storm Financial. CBA had funded margin loans that some Storm clients used to buy Storm-badged products.

A belated admission of the bank’s “shortcomings" in the case helped draw the heat from public criticism. Norris, who was initially reluctant to admit any responsibility, became instrumental in establishing a compensation process for former investors as other banks fought them in the courts.

Norris told Boss he made it clear from his first day that people had to buy into the turnaround. “There were four stages: we were underweight in the business bank; culture because you need a strong culture of trust and team spirit; technology and operational intelligence; and customer satisfaction – the really critical item, but you can’t get that without the first three."

Norris gets a tick on all and also steered his bank through the worst financial crisis in living memory, picking up Bankwest for a bargain price in the process (a deal steered by his chosen successor,
Ian Narev
).

Sir Ralph – his 2006 Distinguished Companion of the New Zealand Order of Merit for services to business was upgraded – hands over to a former consultant but he wasn’t always a banker himself.

Norris started his working life in technology. And perhaps his enduring legacy, operationally rather than culturally, will be the technology transformation he has championed at CBA, one some analysts believe give the bank a five-year head start on rivals and the platform for sustained outperformance.